THE COA L I T I O N ’ S

EN V IRO N M E N T & CLIMATE CHANGE

Executive Summary

A Coalition Government will implement a climate change strategy based on direct action to reduceemissions and improve the environment.

Direct action on soil carbons will be the major plank of our strategy, supported by other direct actionmeasures that will reduce CO2 emissions by 5 per cent by 2020 based on 1990 levels and deliversignificant environmental outcomes – without the need for a great big new tax.

Emissions Reduction Fund

To facilitate direct action, a Coalition Government will establish an Emissions Reduction Fund tosupport CO2 emissions reduction activity by business and industry.

Through the Fund, we will support 140 million tonnes of abatement per annum by 2020 to meet our5 per cent target. This is a once in a century replenishment of our soil carbon.

Through the Fund we will also make incentives available for the oldest and most inefficient powerstations to reduce their emissions in an orderly manner which protects jobs, electricity prices andenergy security. ‘Clean Energy Hubs’ will also be established in the LaTrobe, Hunter and CentralQueensland regions.

The Emissions Reduction Fund will also provide incentives to support further direct action that maybe required to meet our emissions reductions targets. This may include direct action on forestry,energy efficiency, recycling and other measures as required.

Direct Action on Renewable Energy and a New Solar Sunrise for Australia

A Coalition Government will introduce a range of initiatives to boost renewable energy use inAustralian homes and communities, including investing $100 million each year for an additional onemillion solar energy homes by 2020.

To accelerate the roll-out and uptake of renewable energy right across Australia, 125 mid-scale solarprojects will be established in schools and communities and 25 geothermal or tidal power ‘micro’projects will be established in suitable towns.

To support the development of larger scale renewable energy generation, a proportion of incentivesprovided through the Renewable Energy Target will be reserved for bigger projects. Research willalso be undertaken on the potential for high voltage direct current cables to support theestablishment of large scale renewable energy projects in remote locations and to help reclaim landcurrently lost to high voltage transmission corridors in our cities.

A Coalition Government will support a major study into the potential for algal synthesis and biofuelsand support a study into replacing high voltage overhead cables in our cities with undergroundcables. We will also save the ‘Greenhouse Friendly’ programme, axed by Labor.

We will also support direct action to plant an additional 20 million trees in available public spaces.

1Introduction

The Coalition supports strong and effective action to improve the environment and to reduce CO2emissions.

A Coalition Government will support direct action on climate change to reduce Australian CO2emissions by five per cent by 2020, while at the same time delivering real environmental benefits.

This will be achieved without new or increased taxes on Australian industries or increased costs toAustralian households and families.

We are committed to incentives rather than penalties; to rewarding positive action rather thanpunishing Australian families, households and businesses.

Labor’s ETS will also create a system of quasi-property rights that will be hard to amend or abolishshould the understanding of these issues change or the best treatment of them be altered by newglobal agreements.

Instead of supporting good environmental outcomes in Australia, Labor’s ETS relies on thewidespread purchase of emissions reductions from other countries. We don’t believe Australiansshould have to pay a great big new tax to fund outcomes in other countries.

In contrast, the Coalition will ensure that all action taken to achieve our 5 per cent CO2 emissionsreduction target also delivers environmental improvements here in Australia, not overseas.

While there are no cost-free approaches to reducing Australia’s CO2 emissions, direct action can betaken to reduce emissions and improve the environment without the onerous costs of a great bignew tax.

Our policy will cost $3.2 billion over 4 years, while the ETS costs $40.6 billion over the first fouryears.

2Labor’s Great Big New Tax on Everything

Labor’s approach to climate change is nothing more than a great big new tax on families and theAustralian economy. It is a tax policy masquerading as an environment policy.

Labor’s ETS will increase costs for every Australian household and business without producing anymeaningful environmental outcomes. Every Australian will face higher costs of living, especially foressential services like electricity and grocery items.

The best-case scenario under Labor’s ETS is that half of all Australian households will be worse off.1These are working families and pensioners, self-funded retirees and small business owners who willface dramatically higher heating and cooling costs, as well as significantly higher prices for milk,bread and other basic groceries – in direct breach of Mr Rudd’s election promise to keep groceryprices low.

No Explanation of the Detail, No Guarantees on the Costs

Labor has been unable to explain the detail of their ETS or the costs to households and families.

Labor has also refused to guarantee that their ETS won’t result in households and families payingmore.

Kevin Rudd has repeatedly refused to explain the detail of his ETS or debate his ETS in public.2 This isa major failure of leadership and demonstrates how out of touch the Prime Minister has become.

Julia Gillard has also been unable or unwilling to do so, refusing seven times in one interview to telllow income Australian families how much Labor’s ETS will cost them.3

Wayne Swan has also explicitly refused to make any guarantees to low income families.

GILBERT: But can you guarantee that no low income family will be worse off?

SWAN: We can’t guarantee that no one will be worse off. (Wayne Swan, Sky News, 16/11/09)

Labor’s proposed ‘compensation’ will be inadequate and misses the point: families and businesseswill still have to wear the initial costs. Managing the payment of this proposed compensation willalso create a massive bureaucratic ‘money-go-round’, adding huge administrative costs to oureconomy.

The payment of compensation will also create a massive political ‘slush-fund’ providing Kevin Ruddwith an excuse to hand out cheques to favoured groups and electorates while his great big new taxpunishes Australian industries and households.

3Labor’s great big new tax will drive up the price of electricity4 for households and families, forcingthem to decrease their heating in winter and cooling in summer. This will cause particular hardshipamongst pensioners and low income families.

But because electricity consumption is largely inelastic, prices will have to rise significantly toachieve a relatively small change in consumption. So at the heart of Labor’s proposed new scheme isa fundamental economic flaw – it relies on massively increasing the price of an inelastic good in anattempt to produce a change in consumer habits.

The cost of the scheme is shown by Labor’s own figures. Labor’s proposed scheme will raiseapproximately $16 billion in 2020 from Australian households5 to deliver approximately 140 milliontonnes of CO2 savings. This is a dramatically inefficient CO2 price and results from Labor’s reliance onusing energy prices as the lever for reducing emissions, rather than direct action.

The Employment Cost of Labor’s Great Big New Tax

Many of Australia’s largest employers have expressed concern about the thousands of job lossesthat will result from Labor’s great big new tax on everything.6

Rio Tinto has stated that “put simply, the CPRS as proposed will cost jobs - now and in the future.”7

Bluescope and OneSteel say “it’s a direct threat to the New South Wales regional economy and the 12,000 workers and their families.”8

These job losses are the real and tangible results of Mr Rudd’s desire to rush ahead with anemissions trading scheme despite the failure of Copenhagen, and jobs losses are more likely nowthat we know how little the rest of the world will do. However, Mr Rudd and Labor continue toignore the growing evidence of the employment devastation that will be caused by their great bignew tax.

For example, research prepared for State and Territory Governments’ show that 126,000 full-timejobs will be lost or foregone throughout every area of Australia under the Government’s rushed andbungled scheme.9

2,000 jobs to go in Tasmania

1,000 jobs to go in the Northern Territory

These findings are supported by the Minerals Council of Australia,10 the Australian Coal Association11and many other organisations and businesses right across the Australian economy. This growingbody of evidence cannot be ignored.

The Regional Impact of Labor’s Great Big New Tax

Everyone will feel the impact of Labor’s great big new tax – but regional communities will be hithardest of all. Research commissioned by the NSW Government into the regional impacts of Labor’sscheme found that regional centres will be the hardest hit.12 Across Australia, regional communitiesincluding Gippsland, Geelong, central-west Queensland, the Hunter Valley, central WesternAustralia, the Kimberley region and Whyalla / Port Pirie, will bear the brunt of Labor’s ETS.

This bleak outlook for regional Australia is supported by a June 2009 ABARE study that found thateven if agriculture was not brought into the scheme, farmers would face higher electricity, fuel andfreight costs and lower farm-gate prices passed back by processors.13

ABARE also found that broad acre incomes would slump by two per cent in 2011 and be down by upto fourteen per cent by 2015 – a slug of $1,100 initially increasing to up to $8,900 over four years. Inaddition, beef farmers could lose $1,200 initially, increasing to $6,700 by 2015. The outlook is just asbleak for other farmers. Sheep farmers could expect a slug of $800 initially rising to $4,800 by 2015.Crop farmers could expect an initial $1,400 slug rising to $9,700 or $10,600 by 2015. Similarly, dairyfarmers could face a $1,800 slug in 2011, rising to $8,800 or $10,400 by 2015.

Labor’s Lack of Detail in Opposition

Labor has demanded from the Coalition a level of climate change policy detail that they themselveswere unable or unwilling to provide when in opposition.

The substance of Labor’s response in Opposition was to commit to an ETS and then commission areview to develop the detail, with a reporting date well beyond the election.14

Labor’s election policy documents included references to an ETS, but Kevin Rudd provided no detailon how an ETS would be implemented, its scale, its impact, or its cost to families, households andbusinesses.

The Coalition has a strong record on responsible environmental action to reduce CO2 emissions.

Between 1996 and 2007, the Coalition committed some $20 billion to a comprehensive range ofmeasures to restore and protect our natural environment and invested $3.5 billion in actions toaddress climate change.

Clean Energy

The Coalition established the $500 million Low Emissions Technology Demonstration Fund tosupport these projects:

$75 million toward a $420 million project to build a 154MW solar concentrator in regional Victoria;

$50 million toward a $360 million pilot for a brown-coal drying and post-combustion carbon dioxide capture and storage project that will reduce CO2 emissions and potentially be retrofitted to other generators in the LaTrobe Valley;

$60 million to support the world’s largest CO2 capture and storage project in Western Australia that will reduce CO2 emission by approximately 3 million tonnes per annum;

$75 million to the Fairview power project which will extract methane from coal-seams to power a 100MW power station; and

$50 million for a world-first oxy-fuel demonstration project that will store approximately 30,000 tonnes of carbon over three years.15

The Coalition also invested more than $450 million in technologies to reduce emissions from coalactivities.

Renewable Energy

The Coalition provided significant support for renewable energy, with more than $1 billion of theCoalition’s $3.5 billion climate change funding allocated to renewable energy initiatives.

The Coalition established the worlds first Mandatory Renewable Energy Target (MRET) – a legislatednational renewable energy market based on an innovative system of tradeable certificates whichstimulated $3.5 billion of investment in renewable energy technologies since its introduction in2001.

Building on MRET, the Coalition committed to a national Clean Energy Target set at 30,000 gigawatt-hours a year of low-emissions electricity by 2020 – or around 15 per cent of Australia’s electricityproduction. More recently the Coalition led the push for an increase in this target to 20 per cent,resisting Labor’s attempt to hold this increased target hostage to the implementation of theiremissions trading scheme.

The Coalition put in place the $75 million Solar Cities programme, with five solar cities projectsannounced for Adelaide, Townsville, Blacktown, Alice Springs and Central Victoria.16 Together thesesolar cities will provide practical benefits for communities including:

3,464 solar photovoltaic panels to be installed on private and public housing and on commercial and iconic buildings;

4,100 solar hot water systems to be installed in private and public housing;

8,450 energy efficiency consultations to be conducted in households and businesses; and

71,500 energy efficiency packs to be available for households and commercial customers to support their energy efficient choice.

The Coalition also established a $4,000 rebate to help families install solar panels in their homes –and then doubled this rebate to $8,000. This rebate was subsequently scrapped by Labor, breakingan election commitment and creating havoc in the Australian solar industry.17

Adaptation

The Coalition committed $126 million to establish a National Climate Change Adaptation Centre tohelp vulnerable sectors and regions understand the impacts of climate change and develop practicalresponses. This builds on the $14.2 million National Climate Change Adaptation Programme andcomplements a $44 million CSIRO Adaptation Flagship.

The Coalition also invested billions of dollars in measures to help improve the resilience of our landto the impacts of climate change. These included the $5.1 billion Natural Heritage Trust, $1.4 billionNational Action Plan for Salinity and Water Quality, and our revolutionary $10 billion National Planfor Water Security.

Most developed countries have undertaken action on climate change. The G8, for example, hassought to promote cleaner energy and more sustainable development. Some countries haveadopted a national emissions trading approach to reducing carbon emissions, while others haverelied on taxes or a mixture of the two.

The Americas

The world’s largest emitter of carbon, the United States, has yet to ratify the Kyoto Protocol and hasrelied on incentives for research and development into greater energy efficiency. The Obamaadministration has proposed an emissions trading scheme, but the legislation has yet to passCongress and the passage of the legislation is looking increasingly unlikely. In the interim, manystates within the United States have adopted vehicle, fuel, energy consumption and atmosphericpollution taxes.

Canada has also relied on taxes to curb carbon emissions and has deferred introduction of its ownemissions trading scheme until one has been finalised in the United States, although the AlbertaProvince has its own emissions intensity based trading scheme. Both provincial and nationalgovernments have fuel taxes in place, in part to reduce carbon emissions. In 2005 the nationalgovernment indicated that it would introduce a Large Final Emitters System, which is an emissionstrading scheme for the mining, manufacturing, oil, gas and thermal electricity sectors.

Brazil has committed to cutting emissions by between 36.1 and 38.9 per cent by 2020 compared to2005 levels, but a majority of these reductions will be achieved by limiting further deforestation.18

Europe

The European Union has committed to an unconditional cut in emissions of 20 per cent below 1990levels by 2020 and will go to 30 per cent if substantial action is taken by rest of the world.19 It hasalso introduced an emission trading scheme, albeit with a widely fluctuating price of carbon andsubstantial state subsidies for the renewable energy sector.

The actions of the European Union are complemented by those of individual countries, such asFrance which has its own ‘white certificate’ energy efficiency trading scheme20 and Italy which has itsown range of fuel, vehicle and air pollution charges.21 Many of the Nordic countries have taken moredirect action by introducing electricity tax incentives for most users to use less electricity andextensive subsidies for public transport.

China has announced its intention to substantially cut emissions intensity22 and has a plan toincrease renewable energy and improve energy efficiency. It has also introduced differential vehicleexcise rates based on size and engine capacity.23

India has similarly announced its intention to substantially cut emissions intensity24 and hassubstantial plans to increase both renewable energy supply and energy efficiency.

Japan announced 25 per cent cuts to emissions by 2020 over 1990 levels subject to the outcome ofthe Copenhagen conference, and also plans to implement a compulsory national trading scheme.25

The Commonwealth and State governments have been undertaking a range of policies and programson climate change for more than a decade including, but not limited to, those outlined below.

The Wilkins Report on climate change programs within Australia found that there are too manyprograms being administered and that “many are ad hoc or badly targeted.”26 A keyrecommendation of the Wilkins Report was that the Commonwealth Government use its fiscalresources to consolidate and better organise the various programs administered by the StateGovernments.

The Wilkins Report made it clear that a majority of government expenditure on climate action (over60 per cent) is directed toward technology development and industry assistance. Only 15 per cent ofgovernment expenditure on climate action is directed at encouraging direct action on carbonemissions by households.

The range of disparate, poorly co-ordinated and poorly targeted government programs led to theWilkins Report stating that “on the basis of the evidence available, it is difficult to judge whether theresults achieved by existing programs are sufficient to justify the considerable expenditureinvolved…Many programs appear to have been introduced to address short-term announcementimperatives rather than in response to evidence of a need to act.”27

It is thus not surprising that most of the current government activity to reduce CO2 emissionsappears to be geared more toward fanciful political spin rather than the introduction of meaningful,effective and easily understood direct action on climate change.

Commonwealth Government

The Labor Party used the environment for political gain prior to the election, but like so many otherpolicy challenges Mr Rudd is failing to deliver on the promises he made. Labor has also abandonedmany of the programs that provided for direct community engaged on climate change issues.

Labor introduced a means test on the solar panel rebate and then abolished the scheme only toreplace it with a new one which is complicated, not supported by the solar energy industry, andwhich has been met by widespread confusion and hostility in the community. Two weeks afterscrapping the solar homes rebate, Labor axed the remote solar program as well.

Labor has committed nearly $2 billion toward the development of various technologies through theRenewable Energy Fund ($500 million), the National Clean Coal Fund ($500 million), the Green CarInnovation Fund ($500 million), and other schemes that it claims will promote greater energyefficiency. It is unclear what actual outcomes have been achieved and these announcements haveonly contributed to an ineffective and poorly coordinated government approach.

The Rudd government also introduced the poorly designed rebate for energy efficient insulation inhomes, resulting in widespread reports of rorting and a cost blow-out of $1 billion.

The Labor Government in New South Wales introduced the ‘Greenhouse Gas Abatement Scheme’(GGAS) from 1 January 2003. The Australian Capital Territory Government also adopted the schemefrom 1 January 2005. The GGAS is administered by the Independent Pricing and Regulatory Tribunalof NSW.

Under GGAS, businesses are permitted to emit a share of total allowable emissions in NSW and theACT, but emissions above the permitted level must be offset by surrendering abatement certificatesor participants incur a fine. This ‘baseline and credit’ approach to carbon abatement allows a certainbaseline of emissions to be made, without the need to surrender permits or purchase credits inrespect of this base level of emissions.

Unlike the Rudd government’s ETS, the GGAS is more heavily weighted to creating incentives forfirms to reduce CO2 emissions. The GGAS also dramatically lowers the cost of CO2 reductionscompared to the cap-and-trade approach of the emissions trading scheme.

Northern Territory

The Northern Territory has recently outlined a $34 million climate action policy that recognises thepotential for more effective land management to deliver substantial CO2 abatement. The policystates that effective land management can “deliver enormous opportunities to reduce and offsetcarbon emissions and provide new jobs in the carbon economy.”28 One of the policy’s key targets isto improve CO2 sequestration.

The Northern Territory Government has also introduced a range rebates for households thatpurchase and install selected energy saving devices.

Queensland

The Labor Government in Queensland has released a policy on climate change that centres onreducing energy use throughout the state. This includes a $900 million investment in clean coaltechnology and $300 million of the development of new climate change initiatives. This substantialinvestment stems from the government’s commitment to developing carbon capture and storage sothat “the coal industry has a sustainable future.”29

In addition, the ‘Queensland Gas Scheme’ commenced operations on 1 January 2005. The schemeaims to increase the use of gas in the state by developing new gas sources and infrastructure.30

In 2007 the South Australian Government outlined its climate change policy for 2007-20. This policydid not outline commitments by the Government and included measures that were unfunded.31

The Government has since introduced a Residential Energy Efficiency Scheme (REES), which requireselectricity and gas suppliers to implement energy efficiency measures for households, such as ceilinginsulation.

Tasmania

The Tasmanian Government has indicated that there are substantial opportunities for CO2 to bestored in the state’s public and private forests.32

Victoria

The Victorian Government has committed to increasing the share of electricity generated fromrenewable sources to 10 per cent of the state’s total electricity consumption by 2016. This has beenaccompanied by a series of funding announcements for low emissions energy technology researchand development, as well as a $100 million investment by the government into a large scale solarpower station.

The Government has given a strong commitment to the La Trobe Valley and its coal-fired electricitygenerators, stating that the government is “committed to maintaining the Latrobe Valley as a centreof energy production and expertise, while also creating new opportunities to diversify the regionaleconomy.”33

Western Australia

The Government in Western Australia has committed to a range of measures aimed at reducing CO2emissions, including creating a fund for the development of low emissions energy technology.

In particular, the WA Government has established a Low Emissions Energy Development Fund tosupport low emissions technology and encourage abatement. The WA Government has alsodeveloped a climate change adaptation and mitigation strategy for major sectors of the state’seconomy.

The Coalition is committed to meaningful industry action on climate change.

But rather than punishing industry for production and employment, Australia needs a scheme thatwill provide the incentive for firms to reduce their carbon emissions and, at the same time, minimisethe costs to industry and the Australian economy.

It is vital that any approach to climate change does not hurt the competitiveness of Australianbusinesses and industry. In the aftermath of Copenhagen, it is clear that a tax on production willsimply send jobs and emissions to China, India and Indonesia. Any scheme that adds unnecessarycosts, or which does not result in meaningful reductions in CO2 emissions, will simply raise prices forfamilies and increase unemployment.

An Emissions Reduction Fund

A Coalition Government will establish an Emissions Reduction Fund to directly support CO2 emissionsreduction activities by business and industry.

Through the Fund, the Coalition will call for tenders for projects that will:

1. reduce CO2 emissions;

2. deliver additional practical environmental benefits;

3. not result in price increases to consumers;

4. protect Australian jobs; and

5. not otherwise proceed without Fund assistance.

In order to achieve a five per cent reduction in CO2 emissions by 2020, the Fund will support directaction to hold our national CO2 emissions to a target of approximately 525 million tonnes of CO2equivalent per annum by 2020. This will match Labor’s five per cent emissions reductions target.34

By directly supporting action to reduce emissions to this target level, the Fund will ensure that everydollar of expenditure goes towards actually reducing CO2 emissions rather than a complex churn ofmoney and new bureaucratic activity.

Size of Fund

The Fund will commence operation in 2011-12 with an initial allocation of $300 million, increasing to$500 million in 2012-13, $750 million in 2013-14 and $1 billion by 2014-15.

It is envisaged that the Fund will invest an annual average of around $1.2 billion in direct CO2emissions reduction activities through to 2020.

This is a significant investment in direct action that will deliver the CO2 emissions reductions neededto achieve our commitment of a five per cent reduction by 2020.

Businesses that reduce their emissions below their individual baseline (‘historic average’) will be ableto offer this CO2 abatement for sale to the government. This will provide businesses with a directfinancial incentive to take direct action to reduce their CO2 emissions below their baseline levels.

Small businesses and other entities not covered by NGERS will be able to participate on an ‘opt-in’basis.

Unlike Labor’s emissions trading scheme, businesses will not be penalised for continuing to operateat ‘business as usual’ levels.

Businesses that undertake activity with an emissions level above their ‘business as usual’ levels willincur a financial penalty. The value of penalties will be on a sliding scale at levels commensurate withthe size of the business and the extent to which they exceed their ‘business as usual’ levels.

The value of the penalties will be set in consultation with industry.

Provision will be made to ensure penalties will not apply to new entrants or business expansion at‘best practice.’

Given the trend toward lower emissions-intensive activity, and the economic growth projectionsthat have been built into ‘business as usual’ emissions estimates, this is only expected to apply inexceptional circumstances. The Coalition will engage in community consultation regarding the designof the Fund.

Less Complexity, Less Bureaucracy

Because it is based on NGERS, the Emissions Reduction Fund will be far simpler to implement thanLabor’s great big new tax on everything.

And as it will not be imposing liabilities but instead providing incentives, it will not require a lengthyand complex development process.

The Coalition would therefore propose to have such a scheme in place by 1 July 2011 and it willproceed until at least 2020, subject to review in 2015.

In contrast, the Coalition’s approach ensures that all abatement activity supported by the EmissionsReduction Fund to achieve the 5 per cent emissions reduction target will occur in Australia –delivering environmental benefits here rather than overseas.

14Facilitating Short and Long Term Direct Action

We recognise that many industries face substantial capital expenditure costs in reducing their CO2emissions.

Our Emissions Reduction Fund will provide the capacity for short and long term industry action,allowing firms to better manage their transition to lower CO2 emissions.

By providing incentives, rather than imposing massive balance sheet liabilities, the capital will beavailable for businesses to conduct emissions reduction activities without the need for a massiveinjection of compensation raised through a great big new tax on everything.

A Flexible Approach to Changing Global Developments

Fund arrangements can be changed to meet the obligations of any global agreements to whichAustralia may become a signatory, or amended to reflect the approaches taken by our major tradingpartners and big global emitters. The Coalition remains committed to its previously announcedtarget range.

Implementation

A Coalition Government will establish an expert body to assess tenders and make recommendationson activities to be supported by the Emissions Reduction Fund.

To ensure the Fund supports a broad range of direct action initiatives, measures considered forsupport by the Fund will be assessed against similar proposals from similar sectors. Assessment ofprojects will also take into account any additional significant public policy benefits.

Further detail on the development and operation of the Fund will be determined following anextensive consultation process involving industry, environmental groups and the wider community.

15Soil Carbons – Once in a Century Replenishment of our Soils

The single largest opportunity for CO2 emissions reduction in Australia is through bio-sequestrationin general, and in particular, the replenishment of our soil carbons. It is also the lowest cost CO2emissions reduction available in Australia on a large scale.

Significantly improving soil carbons also helps soil quality, farm productivity and water efficiency,and should be a national goal regardless of the CO2 abatement benefits.

Through the Emissions Reduction Fund a Coalition Government will commit to a ‘once in a century’replenishment of our national soils and farmlands.

Through the Fund we will support up to 85 million tonnes per annum of CO2 abatement through soilcarbons by 2020 – and reserve the right to increase this, subject to progress and evaluation.

Farmers will be entitled to tender for all verified new additions in soil carbon beyond thecommencement of the Fund.

We will commence this work by offering to purchase 10 million tonnes of CO2 abatement throughsoil carbons for 2012-13.

Harnessing the National Benefits of Soil Carbons

The Garnaut Review,35 the CSIRO,36 the Wentworth Group,37 State Governments38 and other groupssuch as the Bio CCS Consortium of Australian companies39 have all indicated the enormous CO2emissions reductions benefits of soil carbons for Australia.

Submissions to the Coalition from farm groups support the potential for a minimum 150 milliontonnes of CO2 equivalent per annum to be captured in soil carbons by 2020 and beyond, with apayment to farmers of approximately $10 per tonne.

International Recognition of Soil Carbons

While soil carbons are not recognised under existing Kyoto Treaty arrangements, any new global CO2emissions reduction agreement is expected to include soil carbons.

Current draft US emissions reduction legislation specifically includes soil carbons, and without theirinclusion it is unlikely that a global agreement will be reached.

35 Ross Garnaut, The Garnaut Climate Change Review Final Report, (2008).36 CSIRO, “Analysis of Greenhouse Gas Mitigation and Carbon Biosequestration Opportunities from Rural Land Use,” (2009).37 Wentworth Group of Concerned Scientists October, Optimising Carbon in the Australian Landscape, (2009).38 Access Economics, Report Prepared for the Council for the Australian Federation, (May 2009).39 The Consortium is comprised of MDB Energy, Ignite Energy Resources, Soil Carbon, Plantstone Technology, Ocean Nurishment and Environment Business Australia. Email to the Shadow Minister for Climate Action, Environment and Heritage, (20 and 31 January 2010).

16Reducing CO2 Emissions in the Electricity Sector

The dominance of coal as Australia’s primary energy source is the principal reason that Australia’sCO2 emissions are higher per capita than in many other countries.40

Electricity generation represented approximately 200 million tonnes of CO2 emissions or nearly 36per cent of Australia’s total CO2 emissions in 2007. The largest proportion of this is base-loadelectricity generated primarily from black and brown coal.

Electricity Generators

Through the Emissions Reduction Fund, a Coalition Government will make incentives available forthe oldest and most inefficient power stations to reduce their emissions in an orderly manner whichprotects jobs, electricity prices and Australia’s energy security.

The Coalition will work with the electricity sector on the design of potential assistance that could beprovided through the Fund to ensure both fairness and cost parity for consumers.

Support from the Fund will only be considered if appropriate guarantees are received in relation tojobs, energy security, and electricity prices.

Creating New Clean Energy Jobs

In addition to potential support to be provided from the Emissions Reduction Fund, we will provide$60 million to develop the La Trobe Valley, Hunter and Central Queensland regions as Clean EnergyEmployment Hubs to drive additional clean energy research and development.

These ‘Clean Energy Hubs’ will support the identification and attraction of new employmentopportunities to assist the transformation of local coal industry jobs transformation to clean energyjobs.

Details on the establishment of these Clean Energy Hubs will be determined in close cooperationwith local business and community leaders from each region.

40 Australian Energy Regulator, State of the Energy Market 2009, (2010), p.13. 17Further Potential Action through the Emissions Reduction Fund

Through the Emissions Reduction Fund, direct action taken on soil carbons will play a major role,delivering an estimated CO2 emissions reduction of 85 million tonnes of the 140 million tonnesrequired in 2020 for Australia to achieve its five per cent CO2 emissions reduction target.

In addition, further direct action to reduce CO2 emissions will be required to meet the 2020 target.

There is a wide range of other activity that could be supported by the Emissions Reduction Fund todeliver the additional emissions reductions needed to achieve the 2020 target. These include, butare not limited to, those outlined below.

Forestry Measures

Forestry can play an important part in climate change mitigation and adaptation policy.

Forest industry-based activities can play a significant role in reducing the CO2 emissions footprint ofAustralia. The CO2 emissions abatement potential is estimated by the National Association of ForestIndustries (NAFI), to be up to 80 million tonnes of carbon abatement per year by 2020.41

Tree planting and forestry activities can also be used to provide a range of benefits in addition toclimate change mitigation, including soil conservation, biodiversity and economic and social benefitsin rural and regional areas from wood production.

Forestry CO2 abatement can assist in the transition to a low emissions future through:

sustainably managed production forests, including both native forests and plantations, as carbon sinks as well as for other purposes (e.g. timber production);

the carbon stored in durable wood products and substitution for more emissions intensive building materials such as steel and concrete; and

the green energy produced from forest industry wood wastes to offset emissions from fossil fuel based energy.

At a price of $15 per tonne, the National Association of Forest Industries has estimated the potentialfor an additional 12-15 million tonnes of annual CO2 emissions abatement from long rotationplantations and wood waste by 2020.

Assessment of forestry projects for possible support through the Fund will include consideration oftheir impact on agriculture, as well as on surrounding ecosystems and water systems.

Coal beds create methane over time due to the heating and compression of the organic materialthat constitutes coal. During the mining of coal, this methane can either escape into the atmosphereor be utilised for electricity generation.

The extensive coal beds throughout Australia, particularly the eastern states, means that coal minegas can represent a substantial source of CO2 abatement.

For example, the methane gas at the Grasstree Mine in Queensland is now tapped for electricitygeneration. This is estimated to abate approximately 5.7 million tonnes of CO2 between 2008 and2012, and to provide electricity for over 30,000 homes each year.42

The sector has indicated the potential for at least 4 million tonnes of CO2 emissions reduction perannum by 2020.43

Green Buildings and Energy Efficiency

Cities accommodate 80 per cent of Australia’s population and produce directly or indirectly over 75per cent of Australia’s greenhouse gas emissions.44 A recent Australia on the Move studycommissioned by the Property Council reports 155,000 new dwellings each year are needed over thenext five years to answer demand with current annual construction some 40,000 units less.45

The built environment also accounts for 23 per cent of Australia’s greenhouse gas emissions.46

Reducing CO2 emissions presents many opportunities for industry, households and government totake action on sustainable living and energy efficiency. We can, for example, embed sustainabilityprinciples in our homes, commercial buildings and workplaces, as well as promote industryinnovation for greening our cities.

In addition to the potential support of energy efficiency projects through the Fund, a CoalitionGovernment will work with a range of industry groups including the Clean Energy Council, the EnergyEfficiency Council, the Green Buildings Council and the Property Council to develop complementaryenergy efficiency measures.

According to the Clean Energy Council, a combination of clean energy measures and a CO2abatement price of $15 per tonne could yield an annual CO2 emissions reduction of 20-30 milliontonnes by 2020.47

42 Department of the Environment, Water, Heritage and the Arts (2010). http://www.environment.gov.au/sustainability/industry/ggap/edl.html43 Confidential letter to the Shadow Minister for Climate Action, Environment and Heritage, (January 2010).44 http://www.bedp.asn.au/design/45 Property Council of Australia, Australia on the Move, (2005).46 http://www.asbec.asn.au/news/asbec_media47 Letter to the Shadow Minister for Climate Action, Environment and Heritage from the Energy Efficiency Council, (27 January 2010). 19Landfill

Australia generates a large amount of refuse that is discarded in landfill sites. Landfill generates CO2emissions due to decomposing organic material contained within the refuse we throw out.Approximately 50 per cent of the emissions from landfill is CO2, with the other 50 per cent beingcomprised largely of methane gas.

This presents Australia with two opportunities. We can both reduce the level of CO2 emissions thatare derived from landfill (whether by reducing landfill itself or managing landfill more effectively)and we can tap into the methane generated from landfill to generate electricity.

The industry has indicated that a $10 per tonne rebate for CO2 abatement could reduce landfillemissions by fifty per cent over the next ten years, or between 4 to 5 million tonnes per annum by2020.48

Composting

Composting involves the gradual, natural breakdown of organic material. It can result in substantialreductions in CO2 emissions if organic waste material is transferred from landfill to compost.

Composting can also reduce CO2 emissions because it is an aerobic process that can reduce theproduction of methane and nitrous oxide in the soil. This is an important consideration as methaneis over 20 times worse than CO2 and nitrous oxide nearly 300 times worse in terms of theirenvironmental impact.

There are many opportunities for Australian industries and households to take direct action onclimate change through more considered approaches to composting. Farmers also haveopportunities to explore more efficient and environmentally friendly composting techniques.

Recycling

Recycling materials and waste produce is a low cost means of reducing Australia’s carbon emissions.This is because recycling reduces the amount of goods that are produced solely from newly sourcedraw resources. It reduces landfill and limits future emissions from landfill by reducing organic wastedeposited in existing landfill sites, and by allowing existing materials (e.g. aluminium, glass, plastic,cardboard) to be reused as productive goods in the economy.

Recycling and the reduction of waste produce offers a low cost means of reducing carbon emissionsthat can be implemented and accelerated within a relatively short timeframe.

Given the enormous ongoing reliance on fossil fuels in the transport sector, and the impact oftransport fuels on CO2 emissions, changes to fuel standards can provide significant opportunities foremissions reductions.49

The introduction of alternative fuels and use of more fuel-efficient vehicles also provideopportunities for future emissions reductions.

Any changes to the fuel mix also have the potential for substantial ‘flow-on’ consequencesthroughout the economy, as well as an impact on government revenue through excise and othermeasures.

Measures relating to transport fuels that are submitted for potential support through the EmissionsReduction Fund will be assessed against strict criteria relating to government revenue and fuelprices.

The following estimates are based on publicly available research as well as direct feedback receivedfrom a range of business and industry representatives during extensive consultation conducted bythe Coalition.

It is important to note that these estimates cover only the activities described. The EmissionsReduction Fund will support additional or alternative direct action that meet Fund criteria.

Any actions supported by the Fund will need to meet the criteria outlined on page 13, namely deliveremissions reductions and additional practical environmental benefits, not result in price increases toconsumers, protect Australian jobs, and be activity that would not proceed without Fund assistance.

Potential Available Indicative CO2 Indicative

Additional Annual Reduction to be CO2 Price CO2 Reduction delivered Per tonne by 2020 through Fund in 2020 Min Max

Soil Carbons 150mt 355mt+ 85 $8 - $10

Electricity Generators & 10mt 30mt $25 - $35

Industry

Forestry Measures 15mt $15

Waste Coal Mine Gas 4mt 8mt 55 $10 - $20

Transport 3mt $40

Green Buildings/ 20mt 30mt $10 - $15

Energy Efficiency

Landfills/Compost/Recycling 6mt 9mt $10 - $15

TOTAL 208 450 140

22Boosting Renewable Energy and Delivering a New Solar Sunrise forAustralia

Solar power is a natural fit with the Australian climate. In a country like ours it makes sense toharness the power of the sun for energy use.

Ongoing developments in solar power technology provide enormous opportunities for Australianhouseholds and families to take direct action to reduce energy consumption and householdemissions, while at the same time delivering real savings for family budgets.

As part of our climate change strategy the Coalition will introduce a range of measures to supportthe increased uptake and use of renewable energy in homes and communities.

CO2 emissions saved through these measures will be in addition to the reductions delivered throughthe Emissions Reduction Fund.

Supporting Solar Energy in Homes

According to the ABS there were approximately 153,600 homes with solar power systems in March2008.50 In addition, the Commonwealth’s ‘Solar Homes and Communities’ programme has resultedin the installation of more than 50,000 systems to October 2009, with 70,000 more installations tobe completed under the programme.51 Approximately 275,000 homes will have solar power systemsinstalled or being installed by the end of 2012.

According to the ABS there were approximately 587,800 homes with solar hot water systems inMarch 2008.52 Another 420,000 households are expected to access the Solar Hot Water RebateProgramme to install solar hot water systems by the time the programme finishes in June 2012.53This means approximately one million homes will have solar hot water heating systems installed orbeing installed by the end of 2012.

Based on these estimates, Australia will have approximately 1.3 million households either using orinstalling some form of solar energy in their homes by the end of 2012.

The Coalition supports this take-up of solar energy. It was the former Coalition Government that firstintroduced significant rebates for the installation of residential solar electric systems andreplacement of energy-intensive electric hot water systems with solar systems in Australian homes.This policy vision laid the groundwork for a significant expansion of the solar industry in Australia.

Borrowing a term previously used in California to promote solar energy use,54 a CoalitionGovernment will provide additional ongoing support for the use of solar energy by Australianfamilies and households.

Our goal is for one million additional solar energy roofs on homes by 2020, including either solarpower or solar water heating systems.

To achieve the goal of one million additional solar energy roofs by 2020, the Coalition will provide anextra $1000 rebate for either solar panels or solar hot water systems. The program would be cappedat 100,000 rebates per year and would therefore be capped at a total cost of $100 million per year.

The rebate will be on top of existing incentives and will replace the current solar hot water incentivewhen it ends. It is intended that the rebate will remain in place until 2020.

Installing an entry level 1kw solar panel on the average household roof will reduce CO2 emissions byabout 1.8 tonnes per year. Similarly, replacing an old peak electric hot water system with a solar hotwater system will reduce CO2 emissions by up to 3 tonnes per year.

Depending on the proportion of rebates provided for solar heating and solar panel, this initiative willtherefore provide an additional annual CO2 emissions reduction of 2.4 to 3 million tonnes by 2020.

Given their solar energy classification, heat pumps will be eligible under the program.

In consultation with the renewable energy sector, we will also consider the inclusion of ceramic fuelcells and other new domestic technologies which may emerge.

Supporting Solar Towns and Schools

Recognising the potential for solar power generation at community level, a Coalition Governmentwill also allocate $100 million to a Solar Towns and Solar Schools Initiative.

Solar Towns: A Coalition Government will hold competitive tenders commencing on 1 July 2011 fortowns and non-capital cities to access direct solar energy for on site use and return to the grid.

Grants will be for a maximum of $2 million each and will be allocated on the basis of greatest savingsof CO2 per dollar of funding. The program will run for 4 years and support a minimum of 25 ‘SolarTown’ projects.

This initiative will be of potential benefit to regional and remote communities disadvantaged byLabor’s scrapping of the Remote Renewable Power Generation Programme (RRPGP).

Solar Schools: In addition to the existing (but suspended) Solar Schools program, a CoalitionGovernment will hold competitive tenders commencing on 1 July 2011 for Flagship Solar Schoolsacross the country to access major solar energy projects for on site use and return to the grid.

Grants will be for a maximum of $500,000 each and will be allocated on the basis of greatest savingsof CO2 per dollar of Government funding. The program will run for 4 years and support a minimumof 100 Solar Schools projects.

A Coalition Government will allocate $50 million to a Geothermal and Tidal Towns Initiative tosupport the development of additional renewable energy opportunities at community level.

A Coalition Government will hold competitive tenders commencing on 1 July 2011 for towns andnon-capital cities to submit proposals for projects that access direct geothermal or tidal energy foron site use and potential return to the grid.

Funding will be provided to support the establishment of micro, pilot and demonstration projectswith the potential to provide renewable power to local communities.

Grants will be for a maximum of $2 million each and will be allocated on the basis of greatest savingsof CO2 per dollar of Government funding.

The program will run for four years and support a minimum of 25 Geothermal and Tidal townprojects.

High Voltage Direct Current Transmission: Cleaning up our Cities and Supporting RemoteRenewable Energy

Most of Australia’s electricity is distributed from power generators along overhead, alternativecurrent systems. This is relatively inefficient as there is substantial loss of electricity duringdistribution. Overhead cables are also unsightly and a common cause of community concern.

High voltage, direct current electricity distribution that is located underground could reduce carbonemissions by increasing the efficiency in electricity distribution. This has the potential to fast-trackthe development of large, commercial solar plants to be developed in the nation’s interior wheresunlight is more constant.

A Coalition Government will commit $2 million for a major study into the use and application of HighVoltage Direct Current (HVDC) transmission within Australia, funded from our Solar Towns andSchools initiative.

The study will examine the costs and benefits of National HVDC network, particularly the CO2 savingsand energy generation savings on a cost per tonne of CO2 basis.

The study would examine the potential land recovery from conversion of the corridors for overheadpowerlines through the use of underground major transmission lines to urban parklands and innerurban housing. In particular there is enormous potential for self funding arrangements through landrecovery and reafforestation of rural and regional areas.

Renewable Energy Certificates issued through the RET scheme are meant to provide an incentive formajor investment in renewable energy, but Labor’s mismanagement has distorted the market,leading to a collapse in the price of these certificates that has undermined the potential for newmedium and large scale renewable energy projects.

This collapse in certificate prices has been caused largely by Labor’s inability to manage the RET in away that appropriately balances the need to provide incentives for household solar and renewableenergy use and larger scale projects that can deliver much more significant renewable energybenefits.

Labor has refused to act in response to this problem, instead referring the issue to a COAG review.

Boosting Larger Scale renewable Energy Projects

A Coalition Government will create a band within the Renewable Energy Target to be reserved forlarger renewable energy projects (over 50 megawatt) or for emerging technologies such as solarfields, geothermal projects or tidal and wave projects over 10 megawatt.

The band to be reserved for these projects will be for up to 6000 gigawatt hours by 2020 and detailswill be determined with the Clean Energy Council and other representatives from the renewablessector.

This will help provide a more appropriate balance with the RET scheme, addressing the uncertaintyand providing a boost for larger renewable energy projects and for emerging technologies.

26Harnessing the Potential of Algal Synthesis and Biofuels

Algae can be used for capturing CO2 emissions and as an alternative fuel source for electricitygeneration. There is potential for algae to be produced cheaply and to be widely employed as acarbon capture source.

For example, in a submission to Senate Committee, MDB Energy indicated that its algal synthesisprocess can lead to one-third of carbon emissions received from an emitter being converted intoalgae oil and the remaining two-thirds into algae meal for livestock.

The potential for algal synthesis has also been touted by the Queensland Premier, who has statedthat the trials conducted by MDB Energy Limited and James Cook University show that Australia andthe world may be about to turn an important corner on being able to set and attain significant CO2emissions reduction targets.

To maximise opportunities for harnessing the benefits of algal Synthesis, a Coalition Government willconduct a 1 year testing process to ensure that algal energy and biofuels are both effective inreduction of quantifiable levels of CO2 and that they will not distort the Australian food chain andfood production processes.

The Coalition will allocate $5 million to this analysis subject to matching funding from within theAlgal Energy and biofuels sector.

Saving the ‘Greenhouse Friendly’ Programme

The ‘Greenhouse Friendly’ programme was launched in 2001 and forms part of the GreenhouseChallenge Plus Programme. Through ‘Greenhouse Friendly,’ Australian businesses could crediblymarket greenhouse-neutral products or services, deliver greenhouse gas abatement and giveAustralian consumers greater environmentally credible purchasing choice.

Labor’s decision to abolish the ‘Greenhouse Friendly’ programme has created uncertainty anddisruption in the voluntary action market. In particular it has seriously hampered the opportunity forfamilies and households to safely take direct action to reduce CO2 emissions.

A Coalition Government will provide $10 million to retain the ‘Greenhouse Friendly’ programme fora period of five years at a cost of $2 million per year. The potential extension of the programmebeyond this period will be reviewed after three years.

27 Green Corridors and Urban Forests

A Coalition Government will commit to the planting of an additional 20 million trees by 2020.

These trees will be for re-establishing urban forests and urban green corridors, using suitable publicspaces in urban and regional corridors to be determined in consultation with local authorities andcommunities, and in accordance with principles of public safety, including fire and road safetyprovisions.

Groups such as Greening Australia and the Nursery and Garden Industry of Australia have stronglyendorsed the local environmental benefits of re-establishing urban forests and urban greencorridors.

We will consult with these and other groups to determine the most appropriate way to deliver thiscommitment.

Based on industry estimates, the planting of 20 million trees will require approximately 200 to 400square kilometres of land area depending on the intensity, and can be delivered at a cost of around$5 per tree.55 While this program will include large scale plantings in regional areas it will alsoinclude urban street planting and highways.

A Coalition Government will conduct an immediate audit of suitable available public space as a firststep towards delivering this initiative.

This initiative will complement the Green Army announced by the Opposition Leader Tony Abbott on14 January 2010, with tree-planting to be potentially conducted by the Green Army in cooperationwith other local conservation, environmental, and community organisations.

Further details on the Green Army initiative will be released prior to the next election, following aconsultation process with conservation and environmental groups.

The Coalition is committed to engaging with the Australian community.

We strongly believe that all Australians should be provided with the opportunity to provide feedbackon our incentive based approach to climate change.

Public Forums

We will be conducting a series of public forums to allow the Coalition to outline its policy. We thinkthere needs to be more debate about these issues and will seek to facilitate this. We will be talkingto prominent figures in the field and will invite them to participate.

To facilitate community consultation, we will conduct a series of public and industry forums in eachstate and territory of Australia. These sessions will be open to the public and will be attended bymembers of the Shadow Cabinet, local MPs and other representatives.

We also invite written submissions from individuals, organisations and industry on our incentivebased approach to climate change and broader vision for the future of Australia’s environment.

We think there needs to be more debate about this issue and we will seek to facilitate this debatethrough our public forums.